Designing Organisation Structure

When designing a new structure or updating a current structure, a top-down and bottom-up approach can be used

Top-down approach Bottom-up approach

Strategy Staff
Layers

Key Processes Processes

Management
Layers
Sub-Processes

• Examines the business strategy to identify the work required to achieve • Examines how work sub-processes and processes can be clustered into
business objectives appropriate groupings to define structure and roles

• This approach is particularly helpful when: • Helpful when the OD initiative is driven by the need to reduce work
inefficiencies or when extensive process changes exist
• The driver for the OD initiative is a recent change in strategy or
leadership; • A good understanding of the current work processes (ideally process
maps) and future work processes (when processes are slated for a
• The focus of the initiative is to structure the management layers of the change) is essential in informing this approach to OD
organization;
• Time and resource constraints would not allow for conducting effort-
intensive bottom-up work analysis.

Note: “Top-down” and “Bottom-up” can be combined for a comprehensive approach to OD. Even when an OD initiative started “top down”, the need to rethink the work performed in
greater details may emerge later on and require some “bottom-up” restructuring to be conducted.
Organizational Models and Structures
Functional and Archetype Designs
A B C
Functional Structure Matrix Structure Product-based

Product A Product B

1 2 3 1 2 3

• A structure that separates a business into
departments defined by their function
• It is a traditional, widely used approach
• Decision making power is centralised and
rests at the top level of the hierarchical
structure
• A structure that establishes dual authority in • A structure that separates business into departments defined by
order to coordinate across functions different products
• It groups employees by both function and
product/ service

D E F
Process-based Hybrid Network

Function A Function B
Process Process Process
1 2 3 Product A Product B

• A structure defined by units based on the core • A structure that uses more than one approach • A structure that uses technology and specialised outside companies
organisation processes; It is designed around to the organisational design and business partners to complete work without having traditional
the processes that create value workspaces
Org Design Checklist based on McKinsey’s 7S Framework
The McKinsey 7s model was developed by Thomas J. Peters and Robert H. Waterman, consultants from the McKinsey consulting firm, in the late
1970s. The framework outlines the seven key elements of business that need to change or be aligned in order to be successful.

Strategy Style
 What is your company’s goal?  What is the leadership style?
 How will resources be used to accomplish that goal?  How do employees respond to management?
 What is unique about your company?  Do employees function competitively, collaboratively, or cooperatively?
 How do you adapt to changing market conditions?  Are there teams or silos?

Structure Staff
 How is the company organized?  Is the current number of employees enough to accomplish goals?
 How are decisions made?  Are there staffing needs?
 How do employees align themselves to the company strategy?  Are there gaps in required capabilities or resources?
 How is information shared?
Skills
Systems  What skills do employees have to deliver core products and services?
 What financial systems are in place for resource acquisition?  Are the current skills of your employees sufficient?
 What systems are in place for recruiting, promotion, and performance  What does the organization do well?
appraisal?  How are skills monitored, assessed, and improved?
 What processes, procedures, and routines are in place to get work done?

Shared values
 What are the values upon which the organization was built?
 How do the values play out in daily life?

After you have answered these questions, analyze the data and look for alignment, consistency, conflicts, gaps, strengths, and weaknesses.